Closing out the month of March, we exited six positions. Market volatility continued this month with war news, concerns over inflation, and higher interest rates. We entered seven new positions since the close of February.
We are currently holding 37 open positions as of April 3rd. We’ve all lost anywhere between $3,924 – $19,621 in March, depending on your investment level of $1k-$5k per trade. I want to take a moment to unpack this because it’s the largest loss I’ve had in a number of years. The worst ever? No, absolutely not. The market can be brutal at times. I started trading options in 1997 and have been through many economic upheavals and administrations. The key to being a good trader and making it long-term is NOT to give up. Learn from your mistakes. Analyze where you could have done better. Let’s examine the trades we sold at a loss this month as they could have been profitable with a 97% total return giving us a potential gain of $5,821 – $29,104, instead of -65%.
We bought these in September and while we sold these at a profit of 107% in March, we should have exited these when they spiked in January for $13.75 which would have given us a 540% profit. Because we had so much extra time before expiration in June I thought we could hold for the drop into the $8 range to rise back up. Instead it halved again. In the future with plays that are significantly up, we’ll sell at a profit and not worry about potential ‘missed’ gains despite there being many days left to expiration.
We bought these in February because earnings were coming up in a week, and the stock reached 2020 levels but was showing signs of basing and consolidating. Earnings came up short and the short-term upward movement we were hoping for never came. The takeaway is with expiration being a month away from the purchase, the exit should have been made at the $2 dollar level at a minimum to limit losses to -60% instead of -99% which we recorded.
We bought these in October when PARA (Paramount) was previously using the ticker VIAC (Viacom). Here’s another example where price dropped after earnings and then started recovering and popped up into $1 in early Jan. We could have mitigated the loss to -48% instead of -100%. Good news is that our other PARA calls expring in Jan next year are still up 90%.
Soon after purchasing these in Dec due to a dip and maintaining its demand/support level, these climbed back to $13 where we should have taken the 49% profit. Then it dropped and stuck around its demand/support level again until it cracked to the $1 level and bounced sharply upwards to $4 looking like it was going to recover. But then after the quarterly report on 2/1 even though reported earnings vs estimate was only missed by -0.01 (-0.95%) and revenue was up $20 mil the market was having none of it and decimating most companies delivering less than robust growth in Jan/Feb due to the overwhelming negative news cycles of inflation/war/interest rates. After expiration taking -100% loss on these, PYPL started showing buyers coming in and raising the price from $98 levels to $120. We’ll keep an eye on future entry.
Here’s another case of being on the right side of the trade having the price climb to $50 soon after purchasing in December. This had the potential to give us 76% profit, but again due to length of expiration left, felt gains could be higher. Then January hit all stocks with negative news cycle of interest rates/inflation/war and despite COIN having an upside earnings surprise of 70% and upside revenue suprise of 27% the market didn’t care.
Lastly, we have the Spy calls we purchased in late Feb. The rate hike news had been known for months and the shock of potential nuclear war subsided. These events panic the market less and less as time goes on. As predicted the options went up to $1.60 giving us 25% return, but just as quickly dropped again on negative news. Every other day we’ve been dealing up 100pts in the futures market, then down 100 pts — rinse repeat. Sometimes all within the same day. Fortunately, we got into QQQ and SPY April calls during the latest drop and the market has been recovering upward the past week.
To summarize, for those with less appetite for risk could have made this a profitable month for themselves if you sold whenever our picks hit 20% profits. Moving forward, we’ll definitely look to cut losses earlier and take profits sooner instead of waiting for those huge 50-100% wins. Onward and upward to a profitable April!